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2011 December

Chaos breeds chaos

(from various sources)

Just a brief recap in the last 30 days, in case you missed a few: the Supercommittee of the US Congress failed to formulate a deficit reduction plan; Republican presidential contenders rise and fall in the polls every day; Qadaffi was found and killed; Kuwait’s government resigned; Berlusconi in Italy resigned; A new government took power in Spain and Italy; Yemen’s President resigned; Egypt voted; Tunisia voted; Morocco voted. Enough change for you?

2011 November

Deaths and Births in Falltime

(from various sources)

Tunisia has voted in a moderate Islamist party, and two secularist parties that pledge to work with it. The body they were voted to is not a Parliament, but rather a constitutional assembly designed to create new constitution. Not far away, a man in power for 42 years lies in a meat locker, buried secretly. A Jordanian king fumbles around, seeking new prime ministers, and the descendants of the Pharaohs tensely await an election. A Crown Prince dies, and another is selected, but whether he will become the King is in doubt. The killings are ongoing in Syria, and over Bahrain, a tense silence reigns. And we are all waiting to exhale.

2011 October

No certainty yet

(from various sources)

Republican presidential contenders have still not sorted themselves out yet, with Florida playing the latest role in upsetting things. Governor Perry of Texas seems to have the lead, but darkhorse Herman Cain won the Florida straw pole, and Florida’s decision to change the timing of its primary may substantially affect the sequence of which state votes first. This potential in changing the sequence may alter whatever momentum a candidate has. The next three months will be critical.

2011 September

Decisions soon to home to roost

(from various sources)

With the German electorate beginning to turn away from Bundeschancellor Merkel, the Finns and the Slovaks resisting contributing to the European Stability Fund, the huge drop in consumer confidence in the US(due in large part to the deficit reduction talks), this Fall will be an interesting political season. The current darling Republication presidential candidate, Gov. Rick Perry, though touting his conservative credentials, supports amnesty for illegal immigrants, and once supported Al Gore for President. It still seems the candidate that can win the Republican nomination will have trouble winning independents, and the ones who can win independents can't become the Republican nominee.

2011 August

A sigh at the end of tension, or is the peace an opportunity to reload?

CNN website, and the Wall St. Journal, various publication times.

The United States has (finally) come up with a two-step debt reduction plan, with a 900 billion dollar down payment on the federal deficit. The real fun begins with a bi-partisan “super committee” of Congress that will come up with recommendations on further reductions, which may also involve changes in the tax code. If they do not come to an agreement, or if Congress does not agree with their plan, spending cuts, divided equally between civilian and military spending will result. A hidden fact lost in the shuffle: Debt service, that is the percentage of GDP that is used to pay interest on the federal deficit, is actually half of what it was during the Reagan and Bush Sr. years. Back then, the percentage was around 3.2 % of GDP. Now, it’s 1.6%

2011 July

A Greek Game of Chicken

(from various sources)

Greece has structural problems, in that few pay taxes and the country as a whole had low productivity; It has political problems, because it is uncertain whether their Parliament will “bite the bullet It has liquidity problems, and needs cash from others just to pay its debt; and can’t afford to pay off the debt in the foreseeable future. So what to do? Bondholders are reluctant to take a “haircut”, that is accept less than face value for their bonds; German taxpayers are horrendously upset for bailing out their profligate neighbors; The French are trying to get the banks to “rollover” some of their debt, in a bid to help French banks who own a fair amount of Greek sovereign debt and a fair proportion of Greek banks; The ECB (European Central Bank) is adamant against any haircut, unless it is voluntary; and the ratings agencies(Moody’s, Standard and Poor’s) saying they will downgrade the banks ratings if they accept a haircut, voluntary or no. With European banks still shaky, even though they passed weakened stress tests, a downgrade by the ratings agencies would be a severe blow.

So the question becomes, who will give up what they insist on, or will this game of Greek chicken become a headless rush for disaster?

2011 June

The Republican Field Presidential Field Narrows, Expands, and Becomes more Confusing

Wall Street Journal. Retrieved from WSJ.com & CNN. Retrieved from CNN.com


In the last 30 plus years of American politics, a single candidate has emerged early in the party’s primaries. Political debate about who that candidate should be was principally confined to inner circles, and Ronald Reagan’s dictum of “Though shall not speak ill of fellow Republicans” held sway. This neither of these regularities are happening. Newt Gingrich lambasted the Republicans deficit reduction plan, specifically those aspects relating to Medicare. Gov. Pawlenty has entered the race, Sarah Palin has “fire in the belly” to become President, and Mitt Romney raised $10 million dollars in one day. The question becomes how much wasted resources will Republicans use to fight each other, and how can the ones who can capture Independents’ votes possibly capture the Republican nomination, and how can the ones you capture the Republican nomination possibly capture the Independent’s votes?

2011 May

Will a Worthy Opponent Please Come Forth?

(from various sources)

Who the Republican nominee for President will be is a good question nowadays, with a number declaring they won’t run, and with Donald Trump beating all in a straw poll a few weeks ago. The Republican party, really a mixture of rebels/Libertarians, Social Conservatives (read fundamentalist Protestants) and Neocons, will have a hard time agreeing on a candidate. The one candidate with national stature, former Governor Romney, might have a chance to beat President Obama, but has a small chance winning the Republican nomination due to his Mormon faith and his previous championing of health-care reform that mirrors much of “Obamacare”. Ron Paul, the Tea Party favorite, along with Sarah Palin, would easily disaffect independents, the swing voters in any election.

2011 April

All Quiet on Some Fronts, but Why?

(from various sources)

With Libya in civil war, Egyptian citizens approving amendments to their soon-to-be defunct constitution, a weakened but still potent opposition in Bahrain,and continuing civil protest in Syria, the on-again-off again departure of Salah in Yemen, the question remains: Why haven’t the other countries in the MENA region gone the same way? Saudi Arabia is the question mark most on people’s minds, but the Shi’ia protests show no sign of expanding beyond their demands for greater economic opportunity and the release of political prisoners. The protests do not seem to have much steam beyond Qatif. I suppose 136 billion dollars King Abdullah announced buys much quiet, and the Shura Council just approved laws allowing home mortgages. The King has also announced the building of 500,000 new houses. Perhaps this is enough in the short and intermediate term. Oman had protests in February, but the Sultan just sacked his government, is distributing a billion dollars a year(from the GCC) to citizens, and is opening up the political process a bit. Jordan recently had violence, but that seemed to be a result of two opposing groups getting a little too close to each other in dueling protests. Algeria has only had some unrest, and perhaps will not have much more: Many are too afraid of restarting the violence of the 1980’s with its 200,000 dead. The Moroccan king has made substantial reforms, and even his critics have praised him. All is quiet in the Emirates and Qatar, but why?

2011 March

A multitude of missing ministers

(from various sources)

President Saleh of Yemen is apparently in negotiations with opposition members of the Yemeni Parliament, apparently causing consternation among those protesting in the streets; Egypt’s Prime Minister Ahmed Shafiq resigned Thursday and was succeeded by a U.S.-educated former transport minister, Essam Shara. Tunisia’s Prime Minister also resigned last week, saying he did not want to be the cause of bloodshed, after several protesters were killed; King Abdullah of Saudi Arabia announced a $36 billion-dollar initiative, mostly aimed at government workers, and those students with loans to the government.

2011 January

Playing with Dominoes again

(from various sources)

In the 1950’s one of the drivers of American Foreign policy was the Domino Theory: if certain pivotal countries fell to Communism, it would have a domino effect on the region. This was the one of the reasons the United States supported South Vietnam in the 50’s and 60’s.

It seems that dominoes are back in fashion in the MENA region. Like the fall of the Berlin wall caused cascading effects on Communist governments in Eastern Europe, the same is happening again. The autocrats of Tunisia are gone, Egypt will soon follow suit, as will Yemen. The question now is, will the autocrats who are left in Algeria, Libya, and Syria be soon to follow, or will they change course enough to avoid revolution?

Clearly though, besides the autocrats, Al Qaeda is the loser. Marketed as the only way to make governments change through its violent tactics, we see hear the masses of people have done without that group. One wonders how chagrined the leaders of Al Qaeda are, given they are no longer the only “change game” in town.

2010 December

Demographics is destiny, once again.

(from various sources)

The latest US Census figures show the continued movement of population from the East to the South and West. People seeking sunshine, however, have more effects than buying more suntan lotion: As a result of Congress’ proportional representation, it means that traditionally Democratic states in the Northeast will lose representation in the House, and more Republican states in the South and West will gain. This first-blush conclusion, however, is not so clear, given why the population has increased: Hispanics make up the bulk of the population gain, and they tend to vote Democratic.

2010 November

Can an artillery shell have a soft landing?

(from various sources)


Or so the hope is for politicians and the rest of us concerned about North Korea. With South Korea restraining itself from initially retaliating, and with a new defense minister at the military helm, most are asking how the North can survive in the long term. China feels it must support the present regime, though recent wikileak entries suggest it is becoming increasingly frustrated with Kim Jong il and his ilk. North Korea has an aging and barely equipped military, with its pilots having perhaps only 25 flight hours per year of training; It has newer subs and some newer missiles, but its million-man army is barely fed. After an initially sharp and violent confrontation, the country would probably collapse. The huge refugee problem would fall mostly on China, which wishes to avoid this humanitarian catastrophe for its own reasons. The North Korean regime is under increasing pressure, given the strains inherent in Kim’s promotion of his son to “general”, though he has no military experience. Another source of pressure: cheap DVDs from South Korea, showing the North their “puppet” neighbor is a bit better of f than they thought.

2010, October

Politics as Usual

(from various sources)

All eyes turned towards the US mid-term elections this week. As expected, the Republicans at the national level retook the House of Representatives, with the largest change of seats since 1948. Democrats retained control of the Senate, but with a number of long-tenured moderates losing their seats. The questions now becomes whether the gains made by some (but by no means all) Tea Party winners in the Republican ranks can coalesce their conflicting agendas in to something positive, whether they will work with more traditional Republicans, and whether they will put forth anything more than legislation they know will be turned down by the Senate and President. Will their strategy, if they have one, be to put forth legislation they know cannot win, continue to be the party of “No”, or work with the rest of the Congress to forge consensus-based, meaningful legislation? The next six months will be telling ones.

2010, October

U.S. Narrows Role of Nuclear Arms

Wall Street Journal. Retrieved from WSJ.com

President Obama has created a nuclear weapons strategy that weakens the ability of the US to respond to any attack enforced by allies or enemies in an event to create mass destruction. The US will not focus on countries that do not have nuclear means and will also not focus on countries who have threatened to use chemical or biological weapons. The policy does not state that the role of the US Arsenal is to deter any nuclear attack that is taken on the US. However, It does state that those countries who have not and do not abide by their obligations under the international nuclear treaties will remain targeted.

2010, October 5

Will the slings and arrows of Bundesbank members shoot down the next ECB chief?

(from various sources)

The almost fait accompli of current Bundesbank’s chief Axel Weber’s succession to head the European Central Bank (ECB) is in doubt, following comments by one of the Bundesbank’s other members, Thilo Sarrazin. Mr. Sarrazin made comments in recent weeks about unique genes in Jews, and disparaged Germany’s growing Muslim minority. Only Germany’s president can fire Mr. Sarrazin for his comments, and it is uncertain whether he will do so. That leaves Mr. Weber to defend an unpopular member of the Bundesbank to protect the Bundesbank from attempts at political interference. As a result, Mr. Weber’s almost-certain replacement of the erratic ECB chief Jean-Claude Trichet is now somewhat in doubt. This has significant implications for ECB monetary policy, as Weber only gave grumbling assent to the ECB bailout funds for Greek sovereign debt, and looks askance at additional help for them. (Reported in the WSJ, Aug. 31, 2010).

2010, September 1

Mid-term Elections

(from various sources)

Many are suggesting that Republicans will make major gains in the upcoming mid-terms elections in November. If and how much is the question: Traditionally, opposing parties usually gain in the mid-terms, a plus for the Republicans. On the other hand, there are a couple of unique factors in this election that make it more of a guessing game than usual:






First of all, there have been a number of “Tea Party” candidates that have won the Republican nominations, including those in Nevada, New Hampshire and Alaska. Their nominations have split the local Republican parties, and sometimes forcing non-Tea Party Republicans to shift to the right. As a consequence, this may alienate independent voters, who tend to be more middle-of-the-road in terms of their politics. This has given the Democratic nominees an edge, including Harry Reid in Nevada.


Second, recent Supreme Court rulings have eviscerated campaign finance laws, including some dating back to 1948. As a result, those previously constrained by those laws, especially large corporations and labor unions will have free financial reign to support their candidates with fewer reporting requirements than before. How this will play out in practice is a good question, but Fox (News) Corporation has already gotten into a bit of a public relations pickle by giving $50 000 to the Republican party.

2010, April 29

Orban’s Triumph

The Economist. Retrieved from Economist.com

Viktor Orban won with two thirds of the vote in the Hungarian parliament. Orban ran under the Fidesz party and promised overly anticipated actions to the Hungarian people. He intends to reduce taxes, enforce dual citizenship for those of mixed nationality( Hungarian and other), and crack down on crime.

The article mentioned controversy with Orban’s nationalist views in hungry and nationalism tends to make the west uneasy. The country still is dealing with massive unemployment and must have a delusion of large governments rescuing the country’s problems.

2010, April 6

U.S. Narrows Role of Nuclear Arms

Wall Street Journal. Retrieved from WSJ.com

President Obama has created a nuclear weapons strategy that weakens the ability of the US to respond to any attack enforced by allies or enemies in an event to create mass destruction. The US will not focus on countries that do not have nuclear means and will also not focus on countries who have threatened to use chemical or biological weapons. The policy does not state that the role of the US Arsenal is to deter any nuclear attack that is taken on the US. However, It does state that those countries who have not and do not abide by their obligations under the international nuclear treaties will remain targeted.

2010, March 1

White House Faces Tough Fight on Climate Push

Wall Street Journal. Retrieved from WSJ.com

Regulating green house emissions, specifically gas emissions have stirred a political battle between congress and the courts. In addition, union workers have also made their point known of this pressing subject.

Congress has proposed a bill to discontinue the Environmental Protection Agency (EPA) ability to regulate gas emissions. On the other hand, the US Federal Courts do not want to take power away from the agency but would rather challenge the EPA rule that limits regulation.

There have been accounts that twenty-four state regulators have urged the EPA to either postpone new limits or discontinue efforts to implement new limits all together. Building and construction unions have also warned the agency that if limits are passed it could have a negative impact on building and construction too serious to be ignored.

2010, January 27

Political Risk Takes Center Stage

Wall Street Journal. Retrieved from WSJ.com

Risk aversion has been on the fore, fronts of the minds of policy makers these past two weeks. With the growing number of markets shifting away from risk, damage to the economic indexes has seen a variety of increases and decreases. The S&P500 fell from its peak nearly 5%, the volatility index has reached a high for the third straight month, and the U.S. high-yield bond spreads over Treasurys have increased almost a half a point from their lowest numbers. In addition, Markit iTraxx Europe’s index has seen steady increases in the cost of default insurance for more than six months.

The sell off of risk is due to many factors. For instance, China’s has limited their spending, Greece is increasing in their debt and is fearful of bank regulation, and investors alike are requiring a larger risk premium then ever before. Higher premiums’ means it costs more to borrow funds and reduces the credit availability to many who attempt to obtain credit.

It is important to not that President Barack Obama’s plans for bank regulation may be the start of a global regulatory shift that leaves banks unable to earn before they can truly finance themselves. “The International Monetary Fund continues to warn that refinancing is a key concern.”

2010, January

Local Nuclear War, Global Suffering

Scientific American. Retrieved from Sciam.com

The threat of regional wars is an issue of concern for those around the world. For instance, India and Pakistan, at odds, can collectively use their substantial nuclear arsenals to create a global winter. A local nuclear war's effects can linger 10 years or more, which can harm health and uncharacteristically cool the globe, according to scientists and simulations. This article brings the policy of nuclear abolition to the forefront, though leading by example may be the first choice.

2010, January 7

Latinos and American Politics: Power in Numbers

The Economist. Retrieved from Economist.com

Hispanics have gone from being relatively unnoticed in the political arena to "political kingmakers." They played a large role in electing current President Barack Obama. This growing influence is partially contributable to the growing Hispanic population to nearly 16% of the US population. Along with this growth, they are becoming more politically active due to fears and anger, as well as their support of conservative family issues.

2010, January 6

Bill's Veto Imperils Rescue Aid to Iceland

Wall Street Journal. Retrieved from WSJ.com

Due to public resistance, the president of Iceland used his executive power to veto a bill. Iceland's president is also the head of state which provides him the ability to veto bills when he sees fit. This the second time in the Iceland's history that the president has used this power. The bill was first passed in December but has been put to a stop in January. The bill stated that it would reimburse the U.K and the Netherlands monies it used to bail out consumers of a failed Iceland bank that collapsed in October 2008. Once the veto was ordered, Iceland's foreign-currency rating was deemed junk and the long-term currency rating was downgraded to BBB-plus.

2010, January 4

Battle over Use of 'Allah' Continues in Malaysia

Wall Street Journal. Retrieved from WSJ.com

Tensions rose between Malaysia's ethnic-Malay Muslim majorities, after its government vowed to challenge a court ruling allowing local Roman Catholics to refer to God as Allah. The Arab word Allah has been used by Malay-speaking Christians for centuries, much as it is used by Christians in Arabic-speaking countries or in Indonesia, where, like Malaysia, the concept of a single God was introduced by Arabic-speaking traders.






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